Oracle may launch its own PaaS offering

Analysts say that despite the risk, Oracle may introduce its own platform-as-a-service offering next week

By Nancy Gohring | 30 September 11

Oracle may unveil its own platform-as-a-service offering next week, setting it in competition with Microsoft's Azure, Salesforce's Heroku and many other smaller services, analysts said.

During its annual OpenWorld conference next week, Oracle is expected to introduce the offering, said Yefim Natis, a Gartner vice president. While Oracle has been selling various products that other companies could use to build either public or private PaaS offerings, it is now planning to host a service itself, Natis said.

Oracle did not reply to a request for comment.

Other analysts said offering such a service is a risk for Oracle but is logical. Oracle may be seeing that enterprises want hosted services and that it will get more value out of offering services itself rather than simply selling products to service providers, said George Hamilton, an analyst with Yankee Group. Oracle could have an ongoing relationship with enterprise customers rather than selling its software to a cloud provider that in turn uses it to deliver functionality.

But the demand for PaaS and other cloud services from the big names in technology is strong, the analysts said. While Microsoft is offering PaaS, few other major vendors that CIOs are comfortable with are. "So mainstream organizations don't want to go for it. They feel there's too much risk," Natis said.

He expects all the major enterprise software companies, including IBM, to have detailed or launched their cloud strategies by the end of next year. Those could include PaaS, infrastructure-as-a-service and software-as-a-service plans. "By that time, when all these guys to whom mainstream IT organizations listen endorse this model, then the mainstream will start moving in that direction," Natis said.

The big vendors have been slow to move to the hosted model in some cases because it's tricky, said John Rymer, an analyst at Forrester. "It's got everything to do with pricing and the business model," he said. Currently, software makers such as Oracle make money by licensing their software per server core. They're still working out how to charge users in a virtualized, cloud environment.

"They have to take cues from Microsoft, and it's taken them three years of work to come up with a pricing model that at least in theory is going to work. They've been through a lot of adjustments," he said. Microsoft launched its Azure PaaS in 2008.

Launching its own PaaS offering would be an about-face for Oracle. "Less than two years ago, Larry was ridiculing [the cloud]," said Natis. Larry Ellison, Oracle's CEO, famously called cloud computing "nonsense."